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SEGMENT REPORTING
 6 Months Ended
Aug. 02, 2015
SEGMENT REPORTING

NOTE D. SEGMENT REPORTING

We have two reportable segments, e-commerce and retail. The e-commerce segment has the following merchandising strategies: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Williams-Sonoma Home, Rejuvenation and Mark and Graham, which sell our products through our e-commerce websites and direct-mail catalogs. Our e-commerce merchandising strategies are operating segments, which have been aggregated into one reportable segment, e-commerce. The retail segment has the following merchandising strategies: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm and Rejuvenation, which sell our products through our retail stores. Our retail merchandising strategies are operating segments, which have been aggregated into one reportable segment, retail. Our operating segments have had similar historical economic characteristics and it is management’s expectation that the operating segments will have similar long-term financial performance in the future.

These reportable segments are strategic business units that offer similar home-centered products. They are managed separately because the business units utilize two distinct distribution and marketing strategies. Based on management’s best estimate, our operating segments include allocations of certain expenses, including advertising and employment costs, to the extent they have been determined to benefit both channels. These operating segments are aggregated at the channel level for reporting purposes due to the fact that our brands are interdependent for economies of scale and we do not maintain fully allocated income statements at the brand level. As a result, material financial decisions related to the brands are made at the channel level. Furthermore, it is not practicable for us to report revenue by product group.

We use operating income to evaluate segment profitability. Operating income is defined as earnings (loss) before net interest income or expense and income taxes. Unallocated costs before interest and income taxes include employee-related costs, occupancy expenses (including depreciation expense), administrative costs and third party service costs, primarily in our corporate departments. Unallocated assets include corporate cash and cash equivalents, deferred income taxes, the net book value of corporate facilities and related information systems, and other corporate long-lived assets.

 

Income tax information by reportable segment has not been included as income taxes are calculated at a company-wide level and are not allocated to each reportable segment.

Segment Information

 

In thousands    E-commerce      Retail      Unallocated     Total  

Thirteen weeks ended August 2, 2015

           

Net revenues1

      $     569,913         $     557,115         $            0        $  1,127,028   

Depreciation and amortization expense

      8,198         20,403         13,154        41,755   

Operating income (loss)

      122,461         40,503         (79,621 )      83,343   

Capital expenditures

      4,582         23,265         18,618        46,465   

Thirteen weeks ended August 3, 2014

           

Net revenues1

      $     522,589         $     516,513         $            0        $  1,039,102   

Depreciation and amortization expense

      7,730         20,358         12,614        40,702   

Operating income (loss)

      120,612         37,058         (72,334 )      85,336   

Capital expenditures

      13,398         19,548         12,454        45,400   

Twenty-six weeks ended August 2, 2015

           

Net revenues1

      $  1,102,486         $  1,055,218         $            0        $  2,157,704   

Depreciation and amortization expense

      16,300         40,553         26,380        83,233   

Operating income (loss)

      250,035         68,629         (163,393 )      155,271   

Assets2

      658,803         1,101,441         635,727        2,395,971   

Capital expenditures

      8,518         43,193         35,138        86,849   

Twenty-six weeks ended August 3, 2014

           

Net revenues1

      $  1,013,878         $     999,554         $            0        $  2,013,432   

Depreciation and amortization expense

      15,137         39,718         24,477        79,332   

Operating income (loss)

      241,748         67,254         (149,340 )      159,662   

Assets2

      588,234         974,474         600,840        2,163,548   

Capital expenditures

      22,875         34,248         26,396        83,519   
1  Includes net revenues related to our foreign operations of approximately $66.9 million and $55.4 million for the thirteen weeks ended August 2, 2015 and August 3, 2014, respectively, and $121.7 million and $106.5 million for the twenty-six weeks ended August 2, 2015 and August 3, 2014, respectively.
2  Includes long-term assets related to our foreign operations of approximately $60.0 million and $62.2 million as of August 2, 2015 and August 3, 2014, respectively.